KIN MING HOLDINGS INTERNATIONAL LTD v. LIN MAN YUAN AND ANOTHER

HCMP 2460/2010

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

MISCELLANEOUS PROCEEDINGS NO 2460 OF 2010

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J U D G M E N T

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Introduction

1.  Pursuant to leave given on 26 November 2010, the plaintiff, (“Kin Ming”) seeks to commit the 1^st defendant (“LMY”) and the 2^nd defendant (“Huang”) to prison for contempt of court.  The grounds of the application are set out in the originating summons.

2.  It is alleged that LMY and Huang have failed to abide by their undertakings given to the court contained in a consent order that I made in HCA216 of 2008 (“the main action”) on 28 October 2010 which was sealed on 29 October 2010 (“the consent order”).

3.  This is the substantive hearing of the application to commit LMY and Huang to prison for contempt of court.

Background

4.  The pleadings in the main action provide the background to these proceedings.  According to LMY’s pleaded case in the main action brought by LMY as the plaintiff against Kin Ming as the defendant, Kin Ming’s wholly-owned subsidiary in Xiamen in the Mainland, known as Kin Ming (Xiamen) Properties Company Limited, was granted certain development rights to jointly develop with another company a piece of land in a development to be known as Strait City.  The land was sub‑divided into 4 sections identified as Lot A1, Lot A2, Lot A3, and Lot A4.

5.  It is LMY’s case that by an oral agreement partly reduced into or evidenced in writing made on or around 16 April 2004 it was agreed that she and Kin Ming by itself and its wholly-owned subsidiary agreed to co‑operate in the development rights in Lot A4 on the terms and conditions as pleaded in the re-amended statement of claim.

6.  It is her case that the agreement she made with Kin Ming was made on behalf of Xiamen Fuman Holdings Limited (“Fuman”).

7.  It is alleged that pursuant to the agreement LMY paid or caused to be paid to Kin Ming a total sum of RMB130 million for the purpose of the development of the co‑operation project under the agreement.

8.  LMY claims damages and other relief arising from what she says is a breach of the agreement made on 16 April 2004.

9.  Kin Ming denies that there was a partly oral and partly written agreement made with LMY.  Its case is that the only agreement it reached with LMY is the written agreement dated 16 April 2004 (“the written agreement”).

10.  Kin Ming also denies that there has been a breach of the written agreement.  It is Kin Ming’s case that the written agreement was terminated according to its terms and that LMY is not entitled to any relief.

11.  Kin Ming also relies on the default judgment of Deputy Judge L Chan (as he then was) given on 27 January 2006 in HCA 2350 of 2005 where Kin Ming was the plaintiff and LMY was the defendant.  The judge observed at paragraph 5 of his judgment that before entering into the written agreement, the parties were aware that the planning or the permitted land use of Lot A4 might be changed and that the written agreement might not proceed. The parties therefore agreed certain clauses as set out in the written agreement.

12.  The judge set out, inter alia, clauses 6.2 and 7.1 of the written agreement.

13.  Clause 6.2 provided that:

“If Party A should fail to diligently obtain from the relevant department of the Government of the Xiamen Metropolis before 30 June 2004 the Notice of Payment of Land Price for this project, Party A should refund to Party B the RMB1 billion within 15 working days after 30 June 2004, the effect of this agreement will, as a result, terminate, Party B’s appointment as director will also be cancelled, if Party A should fail to refund the said sum on time, Party B has the right to claim interest to be calculated in accordance with the judgment rate of the High Court of Hong Kong.”

14.  Clause 7.1 of the written agreement provided that:

“Within 2 years after Party A has refunded the money to Party B, if Party A should obtain the legitimate development right of the above project, Party A must co‑operate with Party B afresh in accordance with the terms of this agreement. However, the interest received from Party A should be refunded in total.”

15.  The Party A referred to in the written agreement is Kin Ming and the Party B is LMY.

16.  The judge declared that the written agreement dated 16 April 2004 signed between LMY and Kin Ming was terminated but without prejudice to its possible revival pursuant to clause 7.1 therein. Subject to that, it was declared that both LMY and Kin Ming were discharged from the further performance of the written agreement.

17.  Despite the default judgment of Deputy Judge L Chan, LMY brought the main action against Kin Ming without applying to set aside the default judgment.

18.  Whilst the main action was proceeding to the close of pleading stage, Jose Kho (“Kho”), a director of Kin Ming, received threatening phone calls in or about late July 2010.  These were from an anonymous caller who called him on his mobile phone and who said that he represented LMY.  He threatened Kho when Kho refused to meet him.

19.  After that incident, Kho said that he received several calls where the callers threatened him by saying that they knew where he and his family lived in Hong Kong and indicating that they could harm him and his family.

20.  On 10 August 2010, when he returned to Hong Kong from an overseas trip, Kho said that he received a call from a male who said that he was called Ah Shing, and he claimed to represent LMY.  He wanted Kho to meet him at North Point for a discussion, but Kho refused and disconnected the call.  The caller called again and threatened Kho, but he again disconnected the call.  There was yet another call from the same caller who scolded Kho using foul language and threatened him that if he did not meet him his whole family would be in trouble.

21.  The next day, 11 August 2010, Kho, after consulting his solicitors, went with his solicitors to make a report to the police about the call that he had received.

22.  On 17 August 2010, Kho received calls from another person by the name of Tsoi Chan Yu (“Tsoi”).  Kho agreed to meet Tsoi as Tsoi claimed to be the attorney of LMY.  Kho met Tsoi who produced a power of attorney in Chinese signed by Huang with the chop of Fuman (“the Tsoi power of attorney”).

23.  According to the evidence, Huang is a cohabitee and business partner of LMY.  Huang is a director of Fuman.

24.  The Tsoi power of attorney stated that LMY signed the written agreement on 16 April 2004 as agent for Fuman.  The Tsoi power of attorney was signed by Huang with the chop of Fuman.  Tsoi was authorised to represent Fuman to negotiate with Kin Ming for the purpose of causing Kin Ming to continue performing the written agreement.

25.  The Tsoi power of attorney was dated 28 July 2010 and was stated to terminate on 28 October 2010.

26.  Kho told Tsoi that he refused to accept that Tsoi had the authority to represent LMY as the Tsoi power of attorney was not signed by LMY.  Kho refused to discuss matters with Tsoi.

27.  It was not until early October 2010 that another approach was made to Kho.  One or two days before 8 October 2010 one Hung Kwok Wai (“Hung”) called Kho on his mobile phone.  Hung claimed to represent LMY.  He called Kho a number of times and Kho eventually agreed to meet him.

28.  Hung and another male went to the offices of Kin Ming at Hutchison House on 8 October 2010.  Hung showed Kho a power of attorney in Chinese also dated 28 July 2010 signed by LMY with the chop of Fuman (“the Hung power of attorney”) authorising Hung to negotiate with Kin Ming for the purpose of causing Kin Ming to continue performing the written agreement.  The Hung power of attorney also stated that it was to terminate on 28 October 2010.

29.  Although Hung and the other male did not utter any overt threatening demand to Kho on that occasion, Kho said that their demeanour was intimidating and that they had intended to make him feel apprehensive.  At the end of the meeting, Kho told them that he did not wish to meet them again or discuss with them about the matter unless LMY or Huang also came to the meeting.

30.  Kho then discussed the matter with his solicitors, and a warning letter was sent to LMY’s solicitors.

31.  Kho received another call from Hung on 13 October 2010 who said that he wanted to go over to Kho’s offices, but Kho reiterated that he did not want to meet them.  Despite this, on 14 October 2010, Hung and the same other male person went up to Kho’s offices and insisted on seeing Kho.  As Hung was insistent and could create a scene if he refused to see him, Kho reluctantly saw him.  Kho repeated to Hung that as the matter was in the course of litigation and unless LMY or Huang were present he did not wish to discuss the matter with Hung, and further, that if Hung persisted he would apply for an injunction.  Hung threatened that he would continue to call Kho and attend his offices.

32.  This led to a further warning letter to LMY’s solicitors asking LMY to refrain from causing a nuisance.

33.  Despite this, on 19 and 20 October 2010, Hung continued to telephone Kho on his mobile phone.  He threatened Kho that if he did not accede to LMY’s claims, the consequences would be very serious.

34.  On 21 October 2010 Kho continued to receive threatening phone calls from Hung.

35.  As a result, Kin Ming applied for and was granted an ex parte injunction on 22 October 2010.  By the ex parte order which I granted it was ordered that LMY and Huang by themselves or either of them or by their respective servants or agents or otherwise until the hearing of an inter partes summons on the return date on 29 October 2010 be restrained from doing the acts specified in the order.

36.  On 26 October 2010, Kin Ming filed and served the counterclaim in the main action on LMY and Huang relying on the acts of intimidation and the harassment that Kho gave evidence of.

37.  In her 4^th affirmation in the main action filed on 28 October 2010 LMY said that Huang was a partner and a director of Fuman.  She said that she entered into the written agreement on behalf of Fuman.  She went on to say that Huang came to know of a Lin Yu Kun who offered to assist in negotiations of a settlement of the dispute with Kin Ming.  Lin Yu Kun informed Huang that LMY and Huang should each sign a power of attorney which they did.  LMY said that she drafted the Tsoi power of attorney and the Hung power of attorney.  These were signed by LMY and Huang respectively.  The attorneys’ names were left blank for Lin Yu Kun to fill in.  The two powers of attorney were then handed to Lin Yu Kun for him to deal with.

38.  LMY went on to say that after she received a copy of the letter dated 11 October 2010 from Kin Ming’s solicitors she called Lin Yu Kun who confirmed to her that Hung and Tsoi were the appointed attorneys under the two powers of attorney.

39.  She denied that there had been any intimidation by Hung and Tsoi.  She informed Lin Yu Kun that Hung and Tsoi should not act in the manner alleged by Kin Ming’s solicitors.

40.  LMY also said that on 20 October 2010 she contacted Lin Yu Kun again when she was informed by her solicitors that Kin Ming’s solicitors had sent another letter alleging that Hung had visited Kin Ming’s offices again. She asked Lin Yu Kun to ask his friends to stop approaching Kin Ming.  She also said that after the ex parte order had been obtained she told Lin Yu Kun of the same and reiterated that all contact with Kin Ming should stop.  Lin Yu Kun agreed and confirmed to her that neither Hung nor Tsoi had contacted Kin Ming since 20 October 2010.

The Undertakings

41.  The return date of the ex parte order was 29 October 2010.  However, on 28 October 2010 LMY and Huang agreed to give undertakings to the court in lieu of an injunction.  Upon the undertakings given as recorded in the consent order, I made an order on 28 October 2010 discharging the ex parte injunction.  The undertakings as contained in the consent order of 28 October 2010 provided that LMY and Huang, whether by themselves or either of them or by their respective servants or agents or otherwise:

“shall not until trial or further Order, whichever is earlier:

(a) intimidate, threaten, pester, annoy or otherwise interfere with [Kin Ming’s] directors, officers, servants and employees or their family members, communicate with them other than through the solicitors for [Kin Ming];

(b) enter the premises of [Kin Ming] namely, Room 1818, 18^th Floor, Hutchison House, 10 Harcourt Road, Hong Kong (the Place of Business);

(c) deter or prevent or attempt to deter or prevent any person from resorting to the Place of Business for the purpose of doing business with [Kin Ming];

(d) in combination or otherwise parade or demonstrate walk or stand in or about the entrance to the Place of Business or elsewhere on the same floor as the Place of Business;

(e) otherwise interfere with [Kin Ming] or communicate with [Kin Ming] otherwise than through the solicitors for [Kin Ming].”

42.  The consent order containing the undertakings was served with a penal notice endorsed thereon.  It was served after the consent order was sealed on the morning of 29 October 2010.  It was served on the solicitors for LMY and Huang on the same day.

43.  There is no dispute that LMY and Huang were well aware of the undertakings given by them to the court in the consent order and the consequences as set out in the penal notice if they should disobey the order.

The Application

44.  Kin Ming complains that because of what transpired after the serving of the consent order containing the undertakings LMY and Huang have been in contempt of court.

45.  Kho gave evidence that in the afternoon of 29 October 2010 Hung again appeared at the offices of Kin Ming without any prior appointment.  He rang the doorbell and behaved abusively using foul language and displayed a threatening demeanour which put the staff in fear for their safety.  After a short while, Kho reluctantly let Hung into the offices to avoid a scene at the entrance.

46.  Kho said that he handed a sealed copy of the consent order to Hung and informed him of the undertakings given by LMY and Huang as contained in the consent order.  Hung informed Kho that no one had told him to stop contacting Kho.  He threatened to continue to telephone Kho and visit his offices.

47.  When Kho pointed out to Hung that the Hung power of attorney had expired on 28 October 2010 Hung denied that was the case. He said that his commission was still on until he accomplished his assignment. On that occasion Hung produced a copy of an agency agreement dated 28 July 2010 between Fuman and one Zhuang Jinxiang (“Zhuang”) which was signed by Huang and Zhuang (“the agency agreement”).

48.  Hung claimed to have derived his authority from Zhuang and he said that he had obtained the Hung power of attorney signed by LMY from Zhuang.

49.  Hung claimed that he had never heard of Lin Yu Kun and that no one had contacted him since he received the Hung power of attorney to stop approaching Kho.

50.  Under the agency agreement it appears that Fuman had appointed Zhuang to negotiate with Kin Ming to continue the performance of the written agreement.  It was the objective of the appointment under clause II to transfer the right to use another lot of land, Lot A1, for it to be registered under the name of Fuman.  It was provided that Fuman would pay Zhuang the sum of RMB60 million as the service charges within 5 business days after the right to use Lot A1 had been transferred to and registered in the name of Fuman.

51.  The litigation in the main action concerned Lot A4 and not Lot A1.

52.  The term of appointment under the agency agreement was up to 28 October 2010.  It was provided under clause III that after expiry even if the objectives of the appointment had not been accomplished but Zhuang had already achieved significant process “through negotiation and unanimous agreement by both parties, both parties will sign a separate supplemental agreement to confirm the extension of the term”.

53.  Kho also gave evidence that Hung continued to harass him even after 29 October 2010 until about March 2011.

The Applicable Legal Principles

54.  The applicable legal principles are not disputed.  It is clear that an undertaking given to the court is equivalent to an injunction and its breach may be punished in the same way as the breach of an injunction (paragraph 45/3/3, Hong Kong Civil Procedure 2012).

55.  It is well settled that even in cases of civil contempt the court has to be satisfied beyond reasonable doubt before making a finding of contempt of court.

56.  The particulars of the breach of the undertakings relied on are set out in the originating summons, and these must be strictly proved by Kin Ming before a finding of contempt can be made.

57.  The particulars of breach are:

“3. Particulars of breach:

(a) Recklessly appointing agents unknown to them by offering an unusually large reward of RMB60 million, without taking any or any proper precaution to ensure that they can stop or otherwise instruct them to desist from continuing to engage in the activities enjoined in the Undertakings set out in paragraph 2 a to e above;

(b) Failing to stop or otherwise instruct their appointed agent or agents to desist from continuing to engage in the activities enjoined in the Undertakings set out in paragraph 2 a to e above.

The above failure has resulted in the appointed agents of the Defendants by Counterclaim, one Hung and another unknown person, continuing to engage in the activities enjoined in paragraph 2 a to e above.”

58.  There is no doubt that affidavit evidence is admissible in committal proceedings unless the court otherwise directs.  For civil contempts, hearsay evidence is also admissible.  However, the court retains the discretion to exclude hearsay evidence.

59.  In Citybase Property Management Limited v Kam Kyun Tak and Ors No. 1 [2003] 2 HKC 98 Ma J (as he then was) in dealing with a case of civil contempt, said at paragraph 17(1) of his judgment:

“Affidavit evidence is invariably used in committal proceedings unless otherwise directed by the court. See o 38 r 2(3), Hong Kong Civil Procedure 2002, at para 52/6/3. Furthermore, hearsay evidence is permissible: see Hong Kong Civil Procedure 2002 at para 52/6/3; Savings and Investment Bank Limited v Gasco Investments (Netherlands) BV No. 2 [1988] Ch 422. The court obviously has a discretion whether or not to disregard such evidence and is certainly duty bound to consider carefully the quality of such evidence. I would, however, make this observation: where contempt proceedings are involved, although affidavit evidence is both admissible and normal, it is important that as much first hand evidence of the actual contempt is adduced or if not, an explanation given as to why such evidence is unavailable. This is not to fetter a court’s consideration of hearsay evidence where appropriate, but no court would wish to make a finding of contempt unless the evidence to support such a finding was good. It is to be borne in mind that in contempt proceedings, there is no burden on the respondent to prove his innocence: see Concorde Construction Co Limited v Colgan Co Ltd (No. 2) [1984] HKC 253 at 257.”

Findings

60.  Kho was cross-examined on his affirmations in support of the application.  Mr Eric Kwok SC, with Ms Vanessa Kwok, for LMY and Huang, submitted that Kho was not a credible witness.  I disagree.  I found Kho to be a credible and reliable witness who was not shaken in cross‑examination.  Despite the criticism of counsel as set out in their submissions, I believe Kho.

61.  As to the particulars (a) of the breach relied on, I am satisfied beyond reasonable doubt that LMY and Huang have recklessly appointed agents unknown to them by offering an unusually large reward of RMB60 million.  This was the reward mentioned in the agency agreement and the appointment of agents was made by LMY and Huang without taking any or any proper precautions to ensure that they can stop or otherwise instruct them to desist from continuing to engage in the activities mentioned in the undertakings.

62.  That is, however, not sufficient for me to make a finding of contempt.  It is also necessary for Kin Ming to satisfy me beyond reasonable doubt of particulars (b) of the breach relied on.

63.  Kin Ming relies on the hearsay evidence of Kho that Hung informed him on 29 October 2010 that no one had told him to stop approaching Kho and that he did not even know Lin Yu Kun.

64.  It seems to me that although Hung did in fact produce a copy of the agency agreement to Kho on 29 October 2010, I am unable to accept that Hung was telling Kho the truth when he said that no one had told him to stop approaching Kho and that he did not even know Lin Yu Kun.  I disregard this hearsay evidence as, in my view, it is unsafe to rely on the same.

65.  No doubt, wanting a share in the unusually large reward of RMB60 million offered under the agency agreement was enough of an incentive to cause Hung to continue his harassment of Kho and Kin Ming even after the consent order was made.

66.  Kho said that Hung refused to even look at the consent order when he showed it to Hung on 29 October 2010.  It seems to me that Hung was not going to stop his harassment of Kho even if he were told to stop as he no doubt was determined to get a share of the large reward.  That he continued to harass Kho until about March 2011 demonstrates that he was not going to stop even if he had been told to do so.

67.  I do not accept the hearsay evidence that no one told Hung to stop approaching Kho.  Hung is a rogue from what I have heard and no doubt he would have been prepared to lie to Kho to suit his own purpose of carrying on with his mission so as to obtain a share in the large reward.

68.  It seems to me that the fact that LMY and Huang were reckless in appointing agents may well entitle Kin Ming and Kho to damages and injunctive relief in their counterclaims but it is not sufficient to prove contempt as alleged.

69.  I am not satisfied beyond reasonable doubt that Kin Ming has established particulars (b) of the breach as set out in the originating summons.

70.  I would also observe that under the Tsoi power of attorney and the Hung power of attorney the appointments came to an end on 28 October 2010 and that thereafter Tsoi was no longer an agent of Huang and Hung was no longer an agent of LMY.

71.  Furthermore, under the agency agreement, the appointment of Zhuang also came to an end on 28 October 2010.  There is no evidence that there was any agreement for an extension of the agency agreement.  There is no evidence that any supplemental agreement was ever signed and executed with Zhuang.  In the absence of a signed supplemental agreement for an extension of the term, the agency agreement also came to an end on 28 October 2010 under its terms.

72.  I am also not satisfied beyond reasonable doubt that on 29 October 2010 and thereafter Hung was an agent for either LMY or Huang when he continued to harass Kho.

Conclusion

73.  I dismiss the originating summons against LMY and Huang.